Ask the Politically Correct!
What was the Bretton Woods System of Monetary Management?
Politically Correct Resolution:
The Bretton Woods system of monetary management established
the rules for commercial and financial relations among the
world's major industrial states in the mid 20th century.
The Bretton Woods system was the first example of a fully
negotiated monetary order intended to govern monetary relations
among independent nation states (Political Economic Internationalism).
Preparing to rebuild the international economic system as World
War II was still raging, 730 delegates from all 44 Allied nations
gathered at the Mount Washington Hotel in Bretton Woods, New
Hampshire, United States, for the (United Nations Monetary and
Financial Conference). The delegates deliberated upon and signed
the Bretton Woods Agreements during the first three weeks of July 1944.
(One month after D-Day, 6 June 1944)
Setting up a system of rules, institutions, and procedures to
regulate the international monetary system, the planners at
Bretton Woods established the International Monetary Fund (IMF)
and the "International Bank for Reconstruction and Development "
(IBRD), which today is part of the World Bank Group. These
organizations became operational in 1945 after a sufficient
number of countries had ratified the agreement.
The chief features of the Bretton Woods system was an
obligation for each country to adopt a monetary policy that
maintained the exchange rate by "tying its currency to the U.S.
dollar" (Wall Street Bankers) and the ability of the IMF to bridge
temporary imbalances of payments.
The seminal idea behind the Bretton Woods Conference was the notion of
open markets. In Henry Morgenthau's farewell remarks at the conference,
he stated that the establishment of the IMF and the World Bank marked the
end of (economic nationalism). This meant countries would maintain their
national interests, but trade blocks and economic spheres of influence
would no longer be their means. The second idea behind the Bretton Woods
Conference was (joint management of the Western political economic order).
Meaning that the foremost industrial democratic nations must lower barriers
to trade and the movement for International settlements of World War Two
On August 15, 1971, the United States unilaterally terminated
convertibility of the dollar to gold. As a result, "the
Bretton Woods system officially ended and the dollar became fully
"fiat currency (funny money)", backed by nothing but the promise of
the federal government. "This action, referred to as the Nixon shock",
created the situation in which the United States dollar became the
sole backing of currencies and a reserve currency for the member states.
A high level of agreement among the powerful on the goals and means
of international economic management facilitated the decisions reached
by the Bretton Woods Conference. Its foundation was based on a shared
belief in capitalism. Although the developed countrie's governments
differed in the type of capitalism they preferred for their national
economies (France, for example, preferred greater planning and state
intervention, whereas the United States favored relatively limited
state intervention), all relied primarily on market mechanisms
and on private ownership.
Thus, it is their similarities rather than their differences that
appear most striking. All the participating governments at Bretton
Woods agreed that the monetary chaos of the interwar period had
yielded several valuable lessons.
The experience of the Great Depression was fresh on the minds of public
officials. The planners at Bretton Woods hoped to avoid a repeat of the
debacle of the 1930s, when intransigent insistence by creditor nations
on the repayment of Allied war debts and reparations, (combined with
an inclination to isolationism), led to a breakdown of the international
financial system and a worldwide economic depression. The "beggar
thy neighbor" policies of 1930s governments, using currency devaluations
to increase the competitiveness of a country's export products to reduce
balance of payments deficits worsened other nation's deflationary spirals,
which resulted in plummeting national incomes, shrinking demand, mass
unemployment, and an overall decline in world trade. Trade in the 1930s
became largely restricted to currency blocs (groups of nations that use
an equivalent currency, such as the "Sterling Area" of the British Empire).
These blocs retarded the international flow of capital and foreign investment
opportunities. Although this strategy tended to increase government revenues
in the short run, it dramatically worsened the situation in the medium and
longer run. (In that there were no great profits from World War One, the
system would be changed after World War Two to allow for greater profits
and less trade restrictions)!
Thus, for the international economy, planners at Bretton Woods all
favored a regulated system, one that relied on a regulated market
with tighter controls on the value of currencies. Although they
disagreed on the specific implementation of this system, all agreed
on the need for tighter controls of the money supply. (Wikipedia)
The main gist of an International Political Economic System is not about
raising Third World Countries to a First World status; but rather,
lowering First World Counteries to a Third World status. By doing
so, destroying what is left of the current Middle Class!
With destruction of the United States isolationism came the seeds for
another Chapter of Global Economic domination by the International
"LUCROR EX BELLUM"
(Profit from War)